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NR533 Break Even Analysis CASE STUDY.

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reak-Even Analysis Case Study You and several of your colleague business partners have decided to establish an outpatient fertility clinic in your service area. All of you are very familiar with thi s patient population base, have completed an extensive market analysis that demonstrated a great need for the service, and are comfortable with setting up a business and the costs associated with this special group of patients. As part of the business plan, you and your partners will need to convince stakeholders that this new service endeavor will be viable. They will want to know how many patients visits annually will need to occur and how long it will take for the service to be at least cost neutral or profitable. To provide them with this information you will perform a break-even analysis. Use the following data, conduct the analysis accounting for the contribution margin of each patient acuity category. • Fixed Costs: $9,788,000 (start-costs, specialty physicians, anesthesiologists, APNs, staff nurses and other staff salaries, specialty equipment, other miscellaneous) • Variable costs: $500/patient visit (specialty equipment, oxygen supplies, other miscellaneous) • Clinic days: Monday-Saturday- 305 days/year • Projected patient visits per year: 7480 • Patient charges by patient acuity category: o Simple (20%) $2000/visit o Moderate (70%) $6500/visit o Complex (10%) $10,000/visit Break-even Analysis Data Table Acuity Category Percentag e % Charge per Visit Visits per Year Charges per Year Visits per Day Charges per Day Contribution Margin Simple 20% $ (7480x0.20 ) $2,992,000 (1496x2000 ) 5 (1496/305 ) $10,000 (5x2000) $1500 ($300) Moderat e 70% $ (7480x0.70 ) $34,034,00 0 (5236x6500 ) 17 (5236/305 ) $110,500 (17x6500) $6000 ($42

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Break-Even Analysis Case Study

You and several of your colleague business partners have decided to establish an outpatient
fertility clinic in your service area. All of you are very familiar with this patient population base,
have completed an extensive market analysis that demonstrated a great need for the service,
and are comfortable with setting up a business and the costs associated with this special group
of patients.

As part of the business plan, you and your partners will need to convince stakeholders that this
new service endeavor will be viable. They will want to know how many patients visits annually
will need to occur and how long it will take for the service to be at least cost neutral or
profitable. To provide them with this information you will perform a break-even analysis. Use the
following data, conduct the analysis accounting for the contribution margin of each patient
acuity category.

• Fixed Costs: $9,788,000 (start-costs, specialty physicians, anesthesiologists,
APNs, staff nurses and other staff salaries, specialty equipment, other
miscellaneous)
• Variable costs: $500/patient visit (specialty equipment, oxygen
supplies, other miscellaneous)
• Clinic days: Monday-Saturday- 305 days/year
• Projected patient visits per year: 7480
• Patient charges by patient acuity category:
o Simple (20%)---------$2000/visit
o Moderate (70%)-----$6500/visit
o Complex (10%)------$10,000/visit


Break-even Analysis Data Table

Acuity Percentag Charge Visits per Charges Visits per Charges Contribution Margin
Category e% per Year per Year Day per Day
Visit

Simple 20% $2000 1496 $2,992,00 5 $10,00 $1500 ($300)
(7480x0.0 (1496/30 0
20 (1496x20 5 (5x200
) 00 ) 0)
)
Moderat 70% $6500 5236 $34,034,0 17 $110,50 $6000 ($4200)
e (7480x0. 00 (5236/30 0
70 (5236x65 5 (17x650
) 00 ) 0)
)
Complex 10% $10,000 748 $7,480,00 2 $20,000 $9500 ($950)
(7480x0. 0 (748/30 (2x1000
10 (748x100 5) 0)
) 00
)
Expected Total Daily Charges 140,500

Expected Total Daily Revenue 128,500


NR533 Break-even Analysis AGR STUDENT VERSION 2 1
Th is s tu d y so u rc e was downloaded by 100000847097152 from CourseHero.com on 06-05-2023
3 _2 0_ 1 9n hs
https://www.coursehero.com/file/59992494/NR533BreakEvenBriscoedocx/

, Break Even point in days 72 days

Break Even point in visits 1796
visits




NR533 Break-even Analysis AGR STUDENT VERSION 2 2
Th is s tu d y so u rc e was downloaded by 100000847097152 from CourseHero.com on 06-05-2023
3 _2 0_ 1 9n hs
https://www.coursehero.com/file/59992494/NR533BreakEvenBriscoedocx/

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